Roth 401(K) loss

[Surfin]

Received a 1099 R with distribution code "B" for 2024 because I rolled the total balance of a Roth 401k to Roth IRA.  
Plan administrator stated the dollars in the 1099 R were reported as a distribution because when I closed the Roth 401K, there had actually been a loss in the cost basis of my contributions.  I had effectively contributed more than I took out when I closed the Roth 401k to roll it. 

Found info on line and somewhat from IRS indicating when a Roth 401k is fully disbursed and closed, in that year only  I can report a loss as a Misc Deduction on Line 27 of Schedule A - which requires itemizing deductions.  (The amount of the rolled Roth 401k then becomes the cost basis in the Roth IRA.)
I cannot find how to enter this value from this 1099 R as a Misc Deduction. 

[dmertz · Accepted solution]

The Tax Cuts and Jobs Act of 2017 suspended until 2026 any miscellaneous deductions subject to the 2% of AGI floor, so you cannot take this deduction on your 2024 tax return.  You might treat the distribution of this unrecoverable basis as a rollover to your Roth IRA, increasing your basis in Roth IRAs.

[Surfin]

Thank you for the reply!

Am I understanding correctly that when I roll a Roth 401k to a Roth IRA, the entire balance rolled becomes the 'basis' for the Roth IRA?

Also, if this Roth 401k loss were to become treated as additional 'basis' for the Roth IRA, should the laws change again and we were to again see the ability to report losses in Roth IRA at the time of full distribution, that increased basis might turn you to be helpful.  Yes?  

[dmertz]

Yes.  Keep in mind that I have seen no guidance from the IRS that indicates that unrecoverable basis in the Roth 401(k) can be treated as a rollover to a Roth IRA.  However, it seems reasonable that if you don't (can't) claim a deduction for unrecoverable basis that that you would retain that basis.  If you enter such a Form 1099-R into TurboTax and indicate that it was rolled over, TurboTax will add it to your basis that it tracks.